Third-party users of audited financial statements generally must prove that they suffered a loss,reliance on the financial statements,and that the auditors knew or should have known that the financial statements were misstated.

Question

Quizplus · Accepted Answer

This statement accurately reflects the legal requirements for third-party users to recover damages from auditors for a misstatement in audited financial statements. They must prove all three elements of loss, reliance, and knowledge or should have known on the part of the auditors.

Third-Party Users of Audited Financial Statements Generally Must Prove That